China SAFE data suggest modest FX inflows in July

Economics Research 18 August 2026 | 3:33PM HKT

China: SAFE data suggest modest FX inflows in July

Bottom line: Xinquan Chen | Our preferred FX flow measure shows net FX inflows of US$7bn in July 2026 (vs. Goldman Sachs (Asia) L.L.C.

US$34bn inflows in June). The current account channel showed US$41bn FX inflows in July, and the portfolio investment channel saw some FX outflows from both FX settlement data (only covering flows denominated in FX) and net foreign receipts (covering flows denominated in both FX and RMB). The July FX conversion ratio moderated to 54% (vs. 65% in June). Official FX reserves declined by US$11bn after being adjusted for FX valuation effects, while commercial banks’ external assets increased by US$41bn from June to July.

1. In July, we saw US$18bn net inflows via onshore outright spot transactions, and US$4bn outflows via freshly entered and canceled forward transactions. Another SAFE dataset on “cross-border RMB flows” showed outflows of US$7bn in the month. Our preferred FX flow measure therefore suggests US$7bn net FX inflows in July, in comparison with US$34bn FX inflows in June (Exhibit 1).

2. The current account channel showed net inflows (US$41bn in July vs. US$65bn inflows in June). We saw a net inflow of US$61bn related to goods trade in July, down from a net inflow of US$81bn in June. The July FX conversion ratio moderated to 54% (vs. 65% in June and 58% in Q2; Exhibit 2). The FX outflows related to the services trade deficit widened to US$13bn in July (vs. a net outflow of US$11bn in June). The income and transfers account showed a US$7bn outflow in July (vs. a net outflow of US$5bn in June).

3. The portfolio investment channel saw US$9bn FX outflows in July (vs. US$4bn outflows in June). North-Bound Bond Connect flows showed US$2bn inflows vs. US$2bn outflows in June (Exhibit 3). As a broader proxy for capital flows, net foreign receipts related to portfolio investment indicated US$21bn outflows in July (vs. US$36bn outflows in June).1

4. Official FX reserves (released earlier in the month) increased to US$3,419bn in July from US$3,416bn in June. By our estimate, FX valuation effects would have raised FX reserves by US$14bn in July, so after adjusting for FX valuation effects, FX reserves declined by US$11bn. In addition, we note that commercial banks’ net external assets increased by US$41bn in July (vs. a US$26bn increase in June; Exhibit 4). The

1 Net FX receipts closely track the BOP portfolio investment balance, covering both inbound and outbound portfolio investment, denominated in either foreign currency or Renminbi. In contrast, FX net settlement only covers those flows denominated in foreign currency.

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outstanding amount of banks’ net external assets now stands at US$1,573bn.

Exhibit 1: Our preferred gauge suggests continued FX Exhibit 2: Single-month FX conversion ratio for goods inflows in July trade balance declined from June to July USD bn USD bn Percent, 6mma Percent, 6mma Cross-border RMB flow (since Oct'15) FX conversion ratio related to goods trade balance Modified FX (the ratio of "FX inflows related to goods trade" to "goods trade balance") flow measure FX flow based on SAFE's onshore FX settlement data

50 50 80 July single-month 80 ratio: 54%

Source: SAFE, Data compiled by Goldman Sachs Global Investment Research The line shows a six-month moving average of FX conversion ratio.

Source: CEIC, Goldman Sachs Global Investment Research

Exhibit 3: Foreign investors bought some RMB bonds in Exhibit 4: Banks’ net external assets increased in July, July while official FX reserves declined after adjusting for FX valuation effect USD bn USD bn Billion USD Billion USD Commercial banks' net external asset changes Official FX reserve changes (adjusted for FX valuation effect*) Inflow

China monthly bond flow in the interbank market -40 -40 -30 CGB PBB -30 -60 -60 NCD LGB -80 -80 -40 -40 Others Interbank Jan-22 Jul-22 Jan-23 Jul-23 Jan-24 Jul-24 Jan-25 Jul-25 Jan-26 Jul-26 -50 -50 * GS estimates based on…